The Power-Crazed Loonies.

The South African electrical power crisis was an oddity. The South African government is nothing if not plan-minded, and it seemed odd that they should not have thought about the possibility that their delayed spending on more electrical power plants might cause difficulties. The South African government is also propaganda-minded, and when the accidental damage to the Koeberg nuclear plant caused brownouts in Cape Town, it was well aware that this was a public relations problem. So why did they not anticipate the problems which developed?

Perhaps they did. Under normal circumstances, the amount of electrical power should have been adequate. It was not, because there were unexpected faults and unusual amounts of maintenance. The Solidarity trade union explained this by the prevalence of black people in ESCOM, explaining that black people are not able to maintain complicated equipment. This might be the case — and yet it sounds suspiciously like the argument that black people cannot fly aeroplanes or sail ships. Might there be other motives?

ESCOM is a commercialised company owned by the government but which has been prepared for privatisation; the government actually planned to break up generation and distribution, along the lines of the inefficient and corrupt policy pursued by the British government, and some of this has even been done. The people in charge are sympathetic to neoliberalism, and it is at least possible that they do not share the developmental approach of some elements in the second Mbeki administration. Could this be a factor?

The brownouts began in late 2007, becoming even more significant after Polokwane. This might well be coincidence, even though this is in summer, when one would expect electricity demand to be lower, and it transpired that ESCOM had sold a great deal of its coal to foreign buyers, running its reserves down astonishingly low. ESCOM then demanded an 18% increase in the electricity tariff, the highest ever increase. It also seems to have lobbied for the government to give it the R20 billion seed money with which to improve its bargaining-position when borrowing money to fund its power station expansion programme. ESCOM has been a very demanding subordinate to the government, considering what appears to be staggering incompetence, and it has been treated with surprising generosity under the circumstances.

Or is this surprising?

One of the most interesting developments is that ESCOM is now demanding a tariff increase, over and above the 18% increase, of almost 60%. This would, it points out, raise the cost of electricity to the level of other countries, and thus eliminate South Africa’s comparative advantage with cheap electricity. Why should ESCOM want to do that? Apparently, because they want to be able to pay off the cost of building new power stations more quickly than they would otherwise.

This sounds partly reasonable — except when one considers the implications and the alternatives. What we have here is an increase of about 75% in electricity cost. It is a devastating blow to those who use electricity; the expense will almost double. Of course, those who use a lot of electricity — wealthier people — can cut back; on the other hand, the most insignificant users, who use electricity only for lighting and to run refrigerators, can hardly do without lights and return to the good old days of canned food and rotten vegetables. It appears discriminatory.

A prominent ESCOM official, asked about those who would find the cost of electricity a blow, agreed that ESCOM would have to think about helping those people out. It transpired that he meant big corporations, big urban centres and, generally speaking, rich people. Poor people who will actually suffer from electricity price rises are simply not considered worth discussing. Meanwhile, of course, the most sensible way to pay for the electricity would be to do so through funding ESCOM via the tax system as well as via the price of electricity. In contrast, “Cost recovery”, as practiced by the followers of the World Bank, tends to discourage people from using electricity and thus makes the distribution of electricity almost pointless; why run the wires to peoples’ homes, if you make it unaffordable for them to use it?

But, as it turns out, that prominent ESCOM official, speaking on the radio, inadvertently blew the whistle on another issue. He explained that while the electricity price in South Africa was low, nobody from outside the country would want to invest in generating electricity here. Hence, hiking the price would not merely make it much easier for ESCOM to pay off its costs, it would also, perhaps more importantly, make it easier for foreigners to buy up South Africa’s electricity generation plants and operate them for their own profit.

Oho! So, what we are talking about here, is using the current electricity crisis to promote privatisation! Now, that makes sense, so long as you do not worry about the interests of the country. It is worth remembering that one reason why ESCOM did not invest in new plant in the late 1990s was because the company was scheduled to be privatised, and you do not incur new debts when you are trying to sell your plant to people who want to make money out of it; they would be buying those debts along with the company, and of course they would not do so.

Cheap electricity (along with cheap labour, of course) was the reason why foreigners were likely to invest in heavy industry in South Africa; it was a hidden subsidy to promote investment. There are, of course, problems with this; heavy industry based on electrical energy is usually very capital-intensive (like aluminium smelters) and therefore does not promote much in the way of jobs, which is a problem. But, at least it is fairly profitable, and those profits can be taxed, and therefore the subsidy to those companies was at least encouraging people to come here and earn money some of which could go into the South African state’s coffers.

Now, we know that the World Trade Organisation hates such things with a deep passion. Under neoliberal doctrine, the state must not be allowed to promote or discourage any corporate practice whatsoever. Instead, corporations must be free to do exactly what they like. Almost certainly, one reason for this is that the WTO is an American front organisation, and the Americans do not want countries to grow rapidly unless those countries are absolutely under their thumbs. Being free to promote corporate investment might lead to rapid growth, which in turn might generate a China-style political crisis for the American government, so such freedom is an absolute no-no — unless the country involved is so powerful, and holds such a stock of US Treasury bonds, that the US can’t afford to antagonise them. South Africa isn’t in that category, and presumably the US, via the WTO, doesn’t want it to get there.

OK, this is crude conspiracy theory, but it is probably more accurate than a more sophisticated but less realistic analysis. Bluntly, what ESCOM is doing is hurting South Africa’s capacity to develop, both by preventing large firms from investing, and by obliging smaller firms to pay more for electricity, so that they will invest less, and by raising the cost of consumer goods and the cost of household electricity so that consumers will be able to buy less with their money and will have less spare cash after the electricity bill is paid. All this, so that it can be easier for First World countries to buy up our generating capacity and reap the benefits of this situation. It is, as George W Bush once observed, a “trifecta”; all manner of good things at once, except for South Africa, for whom it is all bad.

At this point a useful question may be asked: has this situation really developed coincidentally? Is it just that dumb darkies didn’t plan to buy enough electricity plant in time? Is it just that foolish kaffirs cannot maintain electrical plant? Is it, also, that the entire South African media and intelligentsia are so racist that they unanimously come to the conclusion that the problem is dumb darkies and foolish kaffirs, even though this idea is first espoused by the overtly and consistently racist Solidarity trade union, which evolved out of the whites-only Mynwerkersunie? Or can it be that these assumptions are being coaxed in a particular direction by the same vested interests which anticipate benefiting from privatisation and “cost recovery”?

For, of course, such electricity crises are not unique to companies run by people with black skins. We remember the beginning of the century, when California, the Garden of Eden, the paradise for you and for me, was suffering simultaneous power outages and drastic increases in the cost of electricity. Well, some of us remember, and we could do worse than check out Greg Palast’s books, especially The Best Democracy Money Can Buy and Armed Madhouse. Palast explains the technical details of how the Enron corporation (with aid from other private electricity companies) hoodwinked the country into thinking that there was an electricity crisis by such methods as suddenly shutting down plants for “maintenance” when they knew there would be massive demand.

Once the idea of the electricity crisis took hold, they introduced the idea that there should be a complete elimination of state regulation, which had obviously failed. (In fact it had, but only because Enron were paying or persuading the regulators to look the other way, or paying or persuading the politicians not to listen to the regulators.) This was accompanied by a drumbeat of media propaganda in support of deregulating, privatisation and endorsement of the free market way forward, which just happened to mean paying ever more money to the Enron corporation, who were, by their own modest assessment, “the smartest guys in the room”.

Sound familiar? Of course it does! ESCOM seems to have simply taken a few pages out of the Enron playbook. Enron were such dolts that they went bankrupt, of course, and then they could no longer bribe or bully their way out of investigations which eventually exposed the whole criminal conspiracy. Although the conspiracy was downplayed in the US media (when has a corporate conspiracy not been downplayed?) a few Enron executives even went to jail!

Now, it is possible that this is a joint government-ESCOM scam. However, I’d say that this is unlikely. The government has been punting massive corporate developments like the Coega smelter project as flagships. It has also, largely, put privatisation on the back-burner (although ESCOM is full of elves who aspire to work for foreign multinationals). If the government really wanted to privatise ESCOM it would be a lot more cautious about electricity-gulping programmes and it would be working hard on pro-privatisation propaganda — since privatisation has a generally bad smell among most South Africans.

The Creator would guess that this is a plot hatched between ESCOM and the big business people backing Zuma. The electricity “crisis” was blamed on Mbeki, who couldn’t make any accusations against ESCOM or Zuma & Co because he knew that his former allies would not support him, and thus it served as a weapon of mass distraction for the public — and for Mbeki, whose government had to scramble to find escape routes. And just by way of coincidence, there happened to be a pre-prepared escape route down the shit-caked tunnel that leads to privatisation. And, in a year or so, when it is too late to do anything to stop all this bullshit, anything that goes wrong will be blamed on Mbeki. Yeah, right; under Zuma, the business of South Africa is business — the kind of “business” that dogs leave behind them on the pavement.


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